As we approach the end of the tax year, now is a good time to get your finances in order and make sure you have taken all necessary steps to reduce your tax bill. Today we explore essential areas to explore before the tax year ends on the 5th April!
Understanding Your Tax Liabilities:
Before we embark on our journey to reduce your tax bill, it's essential to have a clear understanding of your tax obligations and dates. In the UK, if you are a sole trader business or an individual you will typically face taxes such as Income Tax, and National Insurance Contributions.
Each tax year covers the period of 6th April - 5th April each year, with a self-assessment filing deadline of the following 31st January. For example the 23/24 tax year covers the period 6th April 23 - 5th April 24, with a filing deadline of 31st January 25.
Todays checklist is focusing on how individuals who file a self-assessment can minimise their tax liabilities, so lets explore together:
Checklist to Reduce Your Tax Bill:
Claiming Allowable Expenses:
Whether you are a sole trader business owner, under employment or a property owner, my first top tip is to ensure you're claiming all allowable expenses. From office supplies to travel costs, keeping records of your expenditures can significantly reduce your taxable income.
Capital Allowances:
If you run a sole trader business or have property income, claiming capital allowances on business assets is a great way to reduce your tax bill. Items like equipment, machinery, and vehicles can qualify for tax relief. Stay informed about the Annual Investment Allowance (AIA) to maximise your deductions.
3. Marriage transfer allowance :
If you or or your partner has income for a tax year below the personal allowance, then it is worth considering contacting HMRC to complete a marriage transfer allowance to your partner. This can save tax of up to £252.
Charity Donations :
If you are a higher rate tax payer you can take advantage of receiving additional tax relief on any Charity donations you have made during the tax year. This can be particularly beneficial for individuals with income over £100,000.
Pension Contributions:
Contributing to a SIPP (Self-invested personal pension) is also a great way for higher rate tax payers to reduce their tax liabilities. Explore pension schemes and take advantage of available tax benefits by appointing a good financial advisor.
Seek Professional Advice:
Tax planning can be a complex area and legislation may change. Seeking professional advice from accountants or tax experts ensures that you're making informed decisions tailored to your business's unique circumstances.
If you would like support on anything raised or to see how HPC Accountancy could support you and save you tax, get in touch today!
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